Deal focus: Hua Medicine gets cross-border injection

Expectations are high for Shanghai's Hua Medicine. The company's work on diabetes treatments has brought it attention from multiple players eager to promote the development of innovative medicines by homegrown Chinese firms. Several of them featured in a recent $50 million Series C round led by Harvest Fund Management. These investors are now watching to make sure that the company fulfills its promise.

"This is really a poster child of a new era of world-class innovation in China," says Frank Yu, founder of healthcare-focused PE firm Ally Bridge, which participated in the Series C. "It brings some of the best elements from China and the US."

Ally Bridge was first introduced to Hua through WuXi PharmaTech, which the GP had previously supported in its 2015 management buyout. WuXi had participated in Hua's $50 million Series A round in 2011 and believed Ally Bridge would see the company as a natural fit with its focus on cross-border collaborations.

Ally Bridge found a lot to like in Hua; several top executives were veterans of the China office of global pharmaceutical giant Roche, including co-founder and CEO Li Chen, plus the vice presidents of clinical R&D and pharmaceutical R&D. Their connections to Roche were key to Hua's early development, as they were able to license a promising drug from their former employer for further development.

Recognizing Hua's potential, Ally Bridge led its $25 million Series B round last January, which saw participation by WuXi, Fidelity (now Eight Roads), and Arch Partners, among others. The GP believed that Hua's ability to operate to global quality expectations could serve as an example to the country's other pharmaceutical developers.

"We think that for China, the standards are going to get higher and higher, as in the case of Hua," Yu says. "The key is not just to have a local standard, but to apply global standards to a local market. That's the end goal of the Chinese evolution, on the global stage."

China's Food and Drug Administration has also taken note of the company's prospects, giving development Hua's flagship diabetes medication fast-track status. The drug, which enables patients' bodies to balance blood sugar levels themselves, is the first of its kind to be developed entirely in China. It is currently undergoing stage two clinical trials in the country, with stage three expected to follow later this year, and will begin trials in the US soon.

Ally Bridge plans to use its ties to the Chinese and US pharmaceutical communities to help Hua stay on top of ongoing changes in global standards and industry demand.

"Hua Medicine is a very good example of our focus on novel technologies in both the US and China, and on cross fertilizing some of the best elements of R&D in different geographies," Yu says. "Hua is already cross-fertilizing the markets in both US and China with its clinical trials, and we've been very helpful to that process."

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• Topics
• Greater China
• Healthcare
• Expansion
• Venture
• Ally Bridge
• Harvest Fund Management